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MBA seeks extension, revamp for Home Affordable Refinance Program

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The Mortgage Bankers Association sent a letter to the Federal Housing Finance Agency Thursday asking it to extend the Home Affordable Refinance Program and retool certain guidelines. The FHFA is the regulator for Fannie Mae and Freddie Mac, which administer HARP. The program was launched with the Home Affordable Modification Program in March 2009 to help underwater borrowers refinance into terms with lower payments and more stable products. Refinancings through this program picked up speed at the end of 2010, but it is currently set to expire June 30. In January, the MBA reported that refinancings, a major driver of originations with demand lacking post-homebuyer tax credit, would drop 77% by 2012. The MBA asked the FHFA in its letter to push the expiration date on HARP to Dec. 31, 2012. Currently mortgages with a loan-to-value ratio of more than 125% are not eligible. The MBA said this cap prevents borrowers from the hardest hit regions from entering the program. "FHFA should consider raising or removing the LTV cap on loans that the GSEs already own to allow borrowers who are in severe negative equity positions, yet are still meeting their mortgage obligations, to improve their financial position," MBA CEO John Courson wrote in the letter. The MBA complained about the constrictive nature of the loan-level price adjustments, or LLPAs, which are conducted on loans delivered to the government-sponsored enterprises and based up on features such as credit score, occupancy, number of units and others. The adjustments are capped at 2 percentage points, but the MBA said these fees often push borrowers deeper underwater and recommended an evaluation of the fee structure to help borrowers with the highest LTVs. "HARP is a vital component of a lender’s tool kit to help borrowers remain in their homes," Courson wrote. The FHFA declined to comment on the letter. Write to Jon Prior. Follow him on Twitter: @JonAPrior

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